Hot wheels

When top bosses of most automobile companies were busy chalking out survival strategies last year, the CEO of Rolls-Royce, Tom Purves, was addressing a network of Indian CEOs and executives at a luxury resort in Geneva. The event explored how luxury brands like Rolls-Royce could target markets like India for future growth. For a country that accounts for merely 18 cars out of 1,212 units sold worldwide, the attempt may seem like a wild goose chase, but this iconic carmaker believes that the 21st century maharajahs of India will drive future sales.

India continues to be the jewel in the crown of Rolls-Royce, as it hopes to double its India sales to 40 units this year with the launch of the Baby Rolls, priced at Rs 2.5 crore. The booming sales of luxury cars in a year of recession has taken the world's luxury auto market by storm. In 2009, over 9,000 Indians have driven home in spanking new Rolls, BMWs, Audis or Mercedes, compared to 7,500 in 2008. This may seem like a small speck in India's 1.8 million automobile market; luxury cars by definition attract eyeballs because of their hefty prices, which start at Rs 27 lakh and go up to Rs 4 crore. At Rs 700 crore and growing, the luxury car market isn't small.

Global automakers are rubbing their hands in glee as this segment is slated to double by 2015, even as sales stagnate in developed markets. With a sharp increase in the affluence of Indians, customers are demanding cutting-edge technology and style. Says Benoit Tiers, managing director, Audi India: "Our estimation says India will be the fifth-largest automobile market in the world by 2015. We sold 1,20,000 cars in China in 2008 and India will soon go that way. By 2025, we expect to sell as many cars in India as in Japan, about 20,000 cars."

Last year has been a watershed year for the luxury car market in India, as demand has far outstripped supply. Despite slower growth, the top 1 per cent of India's population is spending like never before. Business tycoons and millionaires from small towns are marking their arrival on the world stage with their posh cars.

But the classic Mercedes is no longer the symbol of wealth as yuppie CEOs and second-generation entrepreneurs are opting for sportier and aggressive brands like BMW and Audi. With sales of 3,619 in 2009, BMW has displaced market leader Mercedes from its leadership position. With total sales of 3,247 cars compared to last year's 3,625, Mercedes has to recover lost marketshare. Says Peter Kronschnabl, CEO of BMW India: "In absolute terms, India cannot compete with other high-volume single markets, but the future belongs to India."

So if you have the passion for wheels, the world's marquee brands are rolling out the red carpet. Of the four new vehicles unveiled by the BMW at the Auto Expo in January 2010, the company is launching the limited edition of the new BMW Gran Turismo. Only an elite 100 will get to own this beauty, priced attractively at Rs 63 lakh. Other launches include the BMWX6 M, priced at Rs 1.3 crore, and the new BMW 760Li at Rs 1.29 crore. If limited edition vehicles excite you, then BMW isn't the only one offering such exclusivity to 100 consumers. To mark Audi's 100-year celebrations, the company has announced a Limited Edition Audi A6 2.7 TDI, which will be available for Rs 37 lakh.

With Audi and BMW snapping at its heels, the pioneer of luxury vehicles in India, Mercedes Benz, has also lined up an array of next generation cars. For those who have written off Mercedes as the big daddy brand must catch the yet-to-be launched MClass 'Luxury Edition', and the new ECoupe. Says Dr Wilfried Aulbur, CEO of Mercedes-Benz India: "We see a situation in India where young professionals want to acquire the best while they are young, and facilitating this is the easy finance scheme."

Automakers are doing all they can to lure the conspicuous consumers in India. From wine and whisky tasting sessions in car showrooms to golf tournaments, these brands are catching the consumer on the go. On target are not just big cities but Tier II cities like Jaipur, Ahmedabad and Surat, where sales of luxury cars are booming. BMW, which opened a dealership in Jaipur three months ago, has already sold 30 cars. Even Audi is promising to offer its full line in India by 2015. Despite being number three player here in terms of volume, India is part of Audi's goal of selling 1.5 million vehicles in total by 2015. With sales of 1,658 cars in 2009 compared to 349 cars in 2007, the target looks like a cakewalk.

Clearly, the hunger for posh wheels has just started in India. And with players like BMW India applying for a non-banking finance company (NBFC) licence, soon retail consumers will be able to lease a Beemer for Rs 60,000 for three years and return it for a new vehicle. To expand the market to include new customers, BMW is launching X1 later this year, which will be priced at Rs 25 lakh to create a whole new segment. This is clearly one market which will see plenty of action.

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